Objective:
- To select the best supplier from among suppliers that can provide the need materials and service.
- To determine impact of supplier performance on organisation’s critical business issues.
- To identify problems that will enable corrective action to be taken to realise productivity improvements
Supplier Evaluation Procedure(also referred to as vendor rating system).
- Identify all potential suppliers for the items being purchased.
- Develop a list of factors to evaluate each supplier.
- Identify relative importance of each factor to your organisation and assign its weighting.
- Performance of individual suppliers should be evaluated against each factor.
- Develop a weighted composite measure for each factor.
Supplier Evaluation Procedure.
- The summation of all the composite measure (score) is the overall rating for each supplier.
- This can then be compared to the overall ratings of the other suppliers.
- The higher the composite measure (score) the closer supplier meets the procuring company.
- Using a supplier evaluation procedure can result in the reduction in the number of suppliers, promote closer relationship with selected suppliers, reduction in inventories and promote cost effectiveness in the supply chain.
